NHL Tells Glendale, Arizona To Subsidize Arena Or Lose The Coyotes

The National Hockey League and the city of Glendale, Arizona are still trying to find a suitor for the Phoenix Coyotes, the financially-troubled franchise that has called the Phoenix suburb home since 1996. The Coyotes began playing in Jobing.com Arena, a $220 million facility paid for with public financing, in 2003, but the NHL took over the team in 2009 when the franchise went bankrupt.

The league and city have been looking for a new owner ever since, and they’ve been close several times before deals fell through. They are reportedly close with multiple potential buyers again, but the deal has stalled because the buyers want Glendale to cough up $15 million a year in arena management fees. If they don’t approve that plan, the NHL says the franchise may have no choice but to leave the city. In other words, the NHL and its buyers want Glendale residents to pay $15 million a year to keep the hockey team they are already subsidizing.

As Pat Garofalo and I wrote in The Atlantic last year, Glendale remains the best example of what goes wrong when cities fork over hundreds of millions of dollars to sports franchises to build new arenas and stadiums. In May 2012, the city faced a $35 million budget shortfall and laid off dozens of city employees even as it was paying more than $25 million in management fees to the NHL to keep the Coyotes in town. It considered using its police station and City Hall as collateral on a loan to cover arena-related debt.

Now, the NHL wants Glendale to cough up $15 million more each year, and stadium advocates want to do the same, because Glendale is already in so deep they surmise that keeping the team is the only way out. But even under the best-case scenario — the Coyotes playing in multiple Stanley Cup Finals in a row — the city would expect to lose $9 million annually on the arena, according to the Arizona Republic. And as sports economist Stefan Szymanski told Pat and I for our piece, that Glendale already has one foot in the hole doesn’t mean it should stick the other one in too. “The argument here seems to be that if you only put a little more in, even though the initial investment wasn’t viable, we now have a plan,” Szymanski said. “It’s like doubling up in gambling to get your money back. At some point, you have to say stop.”

Maybe Glendale residents value keeping the Coyotes in town more than the public employees and services they’re losing. It’s tough to know, though, since the mayor and city council have been evading open meetings laws to discuss the matter with the NHL behind closed doors.